S.
Klepper, Economics
73-100, Fall 2011

If
each unit of food requires one unit of labor and the country has 500 units of
labor, then it can produce a maximum of 500 units of food. Regarding shelter, the first 200 units of shelter
require 100 units of labor to produce.
The next 200 require 200 units of labor, which leaves 200 units of labor
for all subsequent units of shelter. Each of these subsequent units requires
two units of labor, so that 100 additional units of shelter can be
produced. Consequently, in total 500
units of shelter can be produced.

Suppose
the country devotes all its labor to shelter, thus producing 500 units of shelter
and 0 units of food. To produce one unit
of food, one unit of labor is required.
If one unit of labor is taken from shelter production, shelter
production is initially reduced by one-half of a unit. This will continue until 200 units of food
are produced, using 200 units of labor.
Thus, the opportunity cost of each of the first 200 units of food is
equal to one-half of a unit of shelter.
When 200 units of food are produced using 200 units of labor, 300 units
of labor will be left to produce shelter.
As one additional unit of labor is transferred to food to increase food
production by one unit, shelter production will then fall by one unit. This
will continue to hold for the production of the next 200 units of food. Thus, the opportunity cost of each of the
next 200 units of food above 200 is one unit of shelter. After 400 units of food are produced, each
additional unit of food will again require one unit of labor, but the transfer
of this one unit of labor from shelter will reduce the number of units of shelter
produced by two units. Therefore, the
opportunity cost of each unit of food doubles after
200 units of food are produced and then doubles again after 400 units of food
are produced. Regarding shelter, the
opportunity cost of each of the first 200 units is one-half unit of food since
each of the first 200 units of shelter requires one-half unit of labor. The next 200 units of shelter each require
one unit of labor, hence the opportunity cost of each
of the next 200 units of shelter is one unit of food. Further units of shelter each require two
units of labor, hence the opportunity cost of each of
these units of shelter is two units of food. Therefore, the opportunity cost of
shelter doubles after 200 units of shelter are produced and then doubles again
after 400 units of shelter are produced.

Based
on this description, the answers to the individual questions are:

_____1. True

_____2. False

_____3. True

_____4. False

_____5. True